SEBI gives nod to 10x hike in NSE’s Share Capital

The Securities and Exchange Board of India (Sebi) has approved changes to the National Stock Exchange's (NSE) memorandum of association, allowing the exchange to increase its authorized share capital by 10 times to ₹500 crore. This approval facilitates the NSE’s planned bonus issue and offers the exchange the option to issue new shares during its IPO.

On May 3, NSE announced a four-for-one bonus issue, which received shareholder approval on June 23. As a result, NSE plans to issue 1.98 billion bonus equity shares, raising its share capital from ₹49.50 crore to ₹247.50 crore. While the exchange requires ₹162.50 crore in free reserves to distribute the proposed bonus shares, it had ₹10,691 crore in free reserves as of March 31, 2024. The amendment will become effective once it is published in the government Gazette, and the record date for the bonus issue will be set 49 days after this publication.

An NSE spokesperson confirmed via email that Sebi granted approval for the amendment on September 2, describing it as a routine part of the process. "Shareholders will receive four new shares for every share they hold on the record date, which will be determined following the publication in the official Gazette," the spokesperson added.

In addition, on August 27, the NSE board requested a no-objection certificate (NOC) from Sebi to proceed with its IPO, which has been delayed due to regulatory issues, including the co-location case. NSE initially submitted its draft red herring prospectus (DRHP) in 2016, but Sebi returned it in 2019, requiring the exchange to resubmit after resolving the co-location investigation.

The matter is now pending before the Supreme Court. Once the NOC is obtained, NSE can refile the DRHP with updated financials. Currently, NSE’s unlisted shares trade at approximately ₹6,200 each, a 72% rise from ₹3,600 a year ago, giving the exchange a valuation of ₹3.06 lakh crore.

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